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NLRB Says Realty Co.'s Employee Class Waiver Is Unlawful

New York
December 05, 2013
Kelly Knaub

Law360, New York (December 05, 2013, 5:08 PM ET) -- A National Labor Relations Boardadministrative law judge found Wednesday that a California-based realty company’s mandatory employment documents for new and existing employees, which included an arbitration agreement containing a class waiver, violated federal labor law under D.R. Horton.

Nijjar Realty Inc. had argued that a lawsuit filed against it in California court by an employee for unfair labor practices relating to the enforcement of a Comprehensive Agreement and Applicant’s Statement of Agreement — which contained provisions precluding employees from participating in collective and class litigation — should be dismissed because it was grounded on events that predate the six-month limitations period.

Former maintenance worker Gerardo Haro, who signed the documents in December 2011, filed a class action against Nijjar in June 2012, alleging the company required new and existing employees to sign the documents since on or about April 26, 2012, in violation of the National Labor Relations Act. The company, which filed a petition to compel arbitration in December 2012, claims there is no showing it required any employees to sign the forms or that it actually hired any employees after that date, and argues the complaint was time-barred under Section 10(b) of the act.

A Los Angeles superior court judge severed and stayed the Private Attorney General Act claims brought in the suit and ruled to compel arbitration of Haro’s and all other claims on an individual basis. But NLRB Administrative Law Judge Williams Nelson Cates found that the claims brought by Haro were not time-barred and that the company had, in fact, violated the NLRA.

“By enforcing the arbitration provisions set forth in the Comprehensive Agreement and Applicant’s Statement and Agreement by asserting them in litigation brought against the company in Gerardo Haro Guadarrama v. Nijjar Realty Inc. et al. by filing a petition to compel plaintiffs to individually arbitrate their classwide wage and hour claims against the company, the company has engaged in unfair labor practices affecting commerce,” Judge Cates said.

According to the NLRB decision, Haro, who worked at the company from September 2011 until January 2012, was required to fill out a second job application and the CAASA forms on Dec. 29, 2011. Both of his supervisors told him and up to 20 other maintenance workers that they were required to fill out the documents or would not be paid, and he was not informed when he signed the documents that there was an “opt out” box on the forms, according to the decision. The employee, whose first language is not English, said he did not understand the documents he signed, the decision says.

Nijjar had argued that the opt-out provision of the CAASA forms, which allowed employees to entirely opt out of the waiver relating to the right to bring class and collective actions, rendered the waiver lawful, but the judge disagreed with that contention.

“I find, the ‘opt out’ provision of the CAASA employment forms does not render the waiver of class and collective action voluntary; but, rather unlawfully burdens employees requiring them to prospectively trade away their statutory right to engage in collective or class actions, including litigation in any forum, that may arise in the future,” Judge Cates said.

The judge's recommended order states that Nijjar stop its mandatory uses of the CAASA, stop enforcing such agreements by filing petitions to compel individual arbitration in court, and stop interfering with employees exercising their right under the NLRA.

It also recommends the company withdraw its petition to compel individual arbitration in the Haro case within seven days; reimburse Haro for all legal and other expenses incurred; rescind, modify or revise the CAASA to ensure its workers know the forms do not contain a class waiver; notify them of the new forms; and post copies of the notice within 14 days at its California locations.

The board will adopt the findings, conclusions and recommended order if Nijjar does not file any exceptions.

“We’re very pleased with the decision, and we hope that the full board adopt it,” David Spivak, attorney for plaintiffs, told Law360 on Thursday. “These workers are all low-wage Spanish speakers, so without the class action vehicle, they really don’t have any hope of a remedy.”

Representatives for Nijjar did not immediately return a request for comment.